So your offer on the home your dream home was accepted, that’s great! Now it’s time to close and as much as you want to sign the papers and move into your new home, it’s important you fully understand the closing documents. When reviewing your closing documents there are several things to pay attention to; you could actually go to jail if you don’t review the documents you sign enough.
Not thoroughly reading or claiming you didn’t understand the terms of disclosures and forms you signed when you bought your home will not hold up in court. While it may seem easier to just sign the bottom of every page to get the process over with, failure to review and understand your closing documents could place you in a hardship and possibly jail.
Tips to keep in mind during the closing:
- Thoroughly review and understand the HUD 1 Settlement Statement. – This breaks down all the costs involved in buying your home and whether money is being collected in escrow for your tax and insurance payments. Don’t be afraid to ask questions. There are lots of lines and it can be extremely confusing, especially for the first time home buyer. The closing attorney or title agency representative should be more than happy to explain things and review them with you as many times as you need them to.
- Review your interest rate, payments and confirm the first payment due date. – If you miss your first payment you will find yourself in big trouble. It is not uncommon for lenders to switch borrowers to higher rates or add on additional fees at the last minute. This is illegal without the proper notifications.
- Make sure you still have plenty of time before you actually close to avoid being pressured into a loan which will financially cripple you later. Take your time, crunch the numbers and make sure you will still be able to afford your home six months from now.
- The most important document to review is your loan application. The final loan application signed at closing can easily hold typos or changes made by shady or dishonest lenders trying to make your application more attractive. Unfortunately this is more common than you think. Go over each section of the agreement to make sure you fully understand your loan.
- It is a federal crime to lie on a loan application. If something doesn’t look right make them change it, otherwise you could really face jail time or find your loan called due early if it’s caught later.
This article isn’t to scare you, but to warn you how important it is to review your closing documents. Buying a home is one of the biggest, if not the biggest purchase you will make in your lifetime, don’t mess it up by not reviewing all your closing documents first.